Estate planning is best known for outlining your wishes or distributing assets after death. However, it also includes planning for a potential incapacity or disability during your lifetime. One of the most underrated estate planning tools is a power of attorney (POA). Whether you’re facing temporary incapacity or require long-term care, a POA can provide the person of your choosing with the legal authority to make decisions on your behalf. Incorporating them in your estate plan can help ensure that your wishes are met no matter what stage in life you’re in.
Power of Attorney Keeps You in Control and can Avoid a Costly Guardianship
A power of attorney is a legal document that authorizes another person, known as the “agent” or “attorney-in-fact,” to act on behalf of the principal who creates the POA. This process is a great way to maintain control of what matters to you most, even when you’re no longer able. POA can provide a lot of flexibility in terms of the agent’s decision-making power and when it takes effect.
The agent should be a highly trustworthy person whom you know will prioritize your best interests. Although the POA doesn’t need to include the daily minutiae of your life and responsibilities, it should provide clear instructions for the agent to follow.
A power of attorney is also the best way to avoid the costly and cumbersome legal process of a Guardianship. If there is no power of attorney in place, a legal guardian will be appointed by the Courts to act on your behalf for medical and/or financial matters. Guardianships can be costly as they require court proceedings both as to the determinantion of lack of capacity and the appointment of the individual to serve as guardian. Afterwards, there is ongoing oversight by the Courts, including annual accountings for the Guardian of the Estate.
Types of Powers of Attorney
There are several types of POA that allow estate planners to designate specific responsibilities to different individuals within their life. Not all types may be necessary to create a comprehensive estate plan. Some common options include:
General Power of Attorney: The agent has the authority to manage a wide range of tasks on behalf of the principal. This may include daily responsibilities like paying bills, caring for pets, or contacting your place of work or school.
Healthcare Power of Attorney: Also known as a “healthcare proxy” or “medical power of attorney,” this agent is designated to make healthcare decisions on behalf of the principal. They can have the authority to make decisions based on their general personal beliefs, or specific procedures to follow can be outlined within the documents.
Limited Power of Attorney: As the name suggests, this type grants limited authority to perform specific tasks. It works well for individuals who may be absent for extended periods of time or recovering from medical procedures and require someone else to handle specific responsibilities.
Durable Power of Attorney: This type remains effective even if the principal becomes incapacitated. This ensures the most seamless transition of decision-making in emergency situations. This document becomes valid as soon as it’s created and signed.
Springing Power of Attorney: This POA “springs” into effect only when a triggering event (i.e., the principal’s incapacity) occurs. The agent named in a springing power of attorney has no authority until the triggering event has happened.
Incorporating Powers of Attorney into Your Estate Plan
To effectively incorporate powers of attorney into your estate plan, it’s important to first understand your needs and wishes. Are you a student who needs to give specific instructions to parents about how to access your bank account or contact professors? Do you want to make sure that someone will know how to make the right decisions if you’re unconscious or on life support? If you’re not sure exactly what type of POA you need, you’ve come to the right place.
At Linville Law Office, PLLC, we can help you identify your needs and tailor an estate plan to fit your individual circumstances. If you or someone you know is looking for guidance regarding powers of attorney or would like to start crafting a comprehensive estate plan, our office is conveniently located in south Charlotte for in-person or virtual visits. Give us a call at (704) 323-6712.